OPEC says 3 shirk­ers reaf­firm cuts

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - In­for­ma­tion for this ar­ti­cle was contributed by An­gelina Ras­couet, Nayla Raz­zouk and Jes­sica Sum­mers of Bloomberg News.

GRANT SMITH AND WAEL MAHDI

OPEC said Iraq, the United Arab Emi­rates and Kaza­khstan — which have lagged in their im­ple­men­ta­tion of a deal to cut pro­duc­tion — af­firmed their com­mit­ment to the ac­cord at a meet­ing in Abu Dhabi, United Arab Emi­rates.

“All ex­pressed their full sup­port” for the sys­tem to mon­i­tor the cut­backs “in order to achieve the goal of reach­ing full con­form­ity,” OPEC said in a state­ment on its web­site. Malaysia also at­tended and made the same pledge.

The meet­ing, led by Kuwait and Rus­sia, was sched­uled af­ter sev­eral na­tions fal­tered in their pledges to re­duce out­put. Twenty-four pro­duc­ers, from the Or­ga­ni­za­tion of Pe­tro­leum Ex­port­ing Coun­tries and beyond, agreed to cut pro­duc­tion late last year to try to end a global glut.

Oil prices have fallen 8 per­cent this year on con­cern the agree­ment is fail­ing to drain the world’s bloated oil stock­piles. On Tues­day, West Texas In­ter­me­di­ate crude for Septem­ber de­liv­ery dropped 22 cents to set­tle at $49.17 a bar­rel on the New York Mer­can­tile Ex­change. Brent crude for Oc­to­ber set­tle­ment fell 23 cents to end the ses­sion at $52.14 a bar­rel on the Lon­don-based ICE Fu­tures Europe ex­change.

Saudi Ara­bian En­ergy Min­is­ter Khalid al-Falih promised last month to in­ten­sify pres­sure on cheat­ing coun­tries.

Iraq and the U.A.E. said at the meet­ing that OPEC’s es­ti­mates of their pro­duc­tion — based on data from ex­ter­nal sources — were at fault for any ap­par­ent fail­ures to com­ply, ac­cord­ing to two peo­ple fa­mil­iar with the mat­ter who asked not to be iden­ti­fied be­cause the dis­cus­sion was con­fi­den­tial.

Iraqi com­pli­ance slumped to 29 per­cent in June, its low­est so far, while the U.A.E. made just 60 per­cent of its cuts, ac­cord­ing to data from the In­ter­na­tional En­ergy Agency. Iraq has com­plained that the

● es­ti­mates OPEC uses to mon­i­tor com­pli­ance are in­ac­cu­rate and that it has ac­tu­ally made the full re­duc­tion re­quired.

Kaza­khstan, rather than re­duce its out­put as promised, has steadily in­creased it with the ex­pan­sion of its Kasha­gan oil­field.

OPEC uses sup­ply es­ti­mates com­piled from six ex­ter­nal en­ti­ties, known as sec­ondary sources, to mon­i­tor ad­her­ence to the deal. These in­clude me­dia out­lets and in­sti­tu­tions such as the Paris-based In­ter­na­tional En­ergy Agency and the U.S. gov­ern­ment’s En­ergy In­for­ma­tion Ad­min­is­tra­tion.

While the com­mit­tee met, there were fur­ther signs of the diplo­matic push to en­sure full com­pli­ance.

Iraq’s oil min­is­ter, Jab­bar al-Luaibi, is fly­ing to Saudi Ara­bia at the in­vi­ta­tion of alFalih, Iraq’s oil min­istry said on Tues­day. The two of­fi­cials will dis­cuss co­or­di­na­tion to achieve OPEC’s goals, Iraqi oil min­istry spokesman Asim Ji­had said.

The agree­ment brings to­gether OPEC and non-OPEC na­tions in an ef­fort to take as much as 1.8 mil­lion bar­rels of oil a day off the mar­ket.

Rus­sia and Kuwait are two of the five na­tions that sit on the board that over­sees the im­ple­men­ta­tion of sup­ply curbs. Saudi Ara­bia, which cur­rently holds OPEC’s ro­tat­ing pres­i­dency, also at­tended the meet­ing.

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